"We now see prices falling 50 percent this fiscal year, after predicting 40 percent in October," said Executive Vice President Fumio Muraoka.

As a result, Toshiba lowered its expected profit for fiscal year 2007, which ends March 31, to 125 billion yen ($1.26 billion), from the 180 billion yen it said it expected in October.

It shut down its HD DVD business last month, which Toshiba says will result in an operating loss of 65 billion yen, or $658 million, in addition to 45 billion yen, or $455 million, to shut down the operation.